New York, New Jersey and Connecticut to sue over federal tax law

New York Gov. Andrew Cuomo delivers his 2018 executive state budget proposal during a news conference at the Clark Auditorium in Albany, N.Y., on Tuesday, Jan. 16, 2018. On Friday, Jan. 26, 2018, Cuomo joined with New Jersey Gov. Phil Murphy and Connecticut Gov. Dannel Malloy to announce plans to sue over the federal tax law.(Photo: Hans Pennink, AP)

"There is a very strong argument that the bill is a fundamental violation of states’ rights and repugnant to the very concept of federalism that formed this nation," Cuomo said in a conference call with Connecticut Gov. Dannel Malloy and New Jersey Gov. Phil Murphy.

All three are Democrats, and they ripped the federal tax law, saying it is targeted at wealthy states in the Northeast — which had already given back billions more in tax revenue to Washington than it gets in return.

"This is an assault on those states," said Malloy. "I believe it is illegal. It is why we are standing up and saying this can’t happen."

The new cap on deductions for state and local taxes was one of the ways Congress tried to offset the cost of lowering rates and eliminating other taxes as it wrote the tax bill that was signed into law last year. Combined with new limits on the mortgage interest deduction, the $10,000 cap on state and local deductions was expected to generate an additional $668 billion over the next 10 years, according to the Joint Committee on taxation.

Murphy said states need to fight back against the Republican policies in Washington.

The governors said they are formulating a plan on how and when to file a lawsuit.

"It has nothing to do with sound policy. It is clear: It is punishment," Murphy said.